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Demand for flex real estate spaces remains firm as buyers continue to mix their overall real estate purchases in a bid to control costs while providing conveniences to work for their employees. Flex space, also known as flexible space, is typically a segment of real estate that provides customers with flexible office space based on their needs. Startups are increasingly preferring such real estate setups. Leasing by flex space sellers in January-March 2023 inched closer to that of technology companies for the first time ever, according to a report by Nasdaq-listed multinational investment management company <keyword id="813133" type="General" weightage="100" keywordseo="colliers" source="Orion">Colliers</keyword>. Flex occupiers leased 2.1 million square feet of space during the first quarter of 2023, accounting for 20 per cent, a few paces behind the technology sector's share at 22 per cent and together both segments accounted for nearly 42 per cent of the total leasing across top metros, the Colliers report revealed. "Large technology occupiers have also been leasing spaces in flex spaces due to their added benefits such as flexible lease terms, lower capex and modern workplace designs. This coupled with ongoing recessionary conditions and layoffs in the technology sector has led to a relative pushback in conventional leasing by these occupiers," it said. Bengaluru and Delhi-NCR were the most preferred locations for top flex operators for their expansion. Bengaluru accounted for nearly half of the total flex leasing during the quarter, followed by Delhi-NCR at 30 per cent share, the report said. "Share of the technology sector has declined steadily from 34 per cent in Q1 2022 to 22 per cent in Q1 2023, as corporates continue to focus on building in operational efficiencies through a hybrid model. While Hybrid working has impacted demand for conventional office spaces, it has also fueled demand for flex spaces across top markets. As long-term growth drivers for tech sector remain strong in India, the technology sector will continue to drive office leasing activity through a mix of conventional and flex spaces," says <keyword id="14448391" type="General" weightage="80" keywordseo="peush-jain" source="Orion">Peush Jain</keyword>, Managing Director, Office services, India, Colliers. Overall, the year 2023 has started on a cautious note registering a 19 per cent yearly decline in leasing activity across the top six Indian cities at 10.1 million square feet during the first quarter, according to the report. "On a sequential basis leasing continued to drop, indicating delayed decision-making by occupiers amidst continued economic uncertainties," it said. SEE ALSO: <a href="https://www.businessinsider.in/business/startups/news/zomato-gold-swiggy-dineout-competitor-eazydiner-raises-40-crore/articleshow/99091065.cms">EazyDiner raises ₹40 crore from DMI Alternative Investment Fund</a> <a href="https://www.businessinsider.in/tech/apps/news/how-to-check-tds-dividend-income-and-income-tax-refund-using-the-ais-for-taxpayers-app/articleshow/99025288.cms">How to check TDS, dividend income, and income tax refund using the AIS for Taxpayers app</a> <a href="https://www.businessinsider.in/business/startups/news/ashneer-grovers-new-startup-crickpe-is-a-fantasy-sports-app-that-will-also-reward-cricketers/articleshow/98964195.cms">Ashneer Grover's new startup CrickPe is a fantasy sports app that will also reward cricketers</a>

Demand for flex realty upbeat even as overall sales dip in Q12023: Colliers

<ul><li>The third quarter alone saw a leasing activity of 13.2 million square feet across these major cities. </li><li>Despite the unpredictable global economic conditions, domestic occupiers contributed to nearly 50% of the total <keyword id="181150" type="General" weightage="20" keywordseo="office-space" source="Orion">office space</keyword> occupancy in 2023. </li><li><keyword id="10249841" type="General" weightage="20" keywordseo="flex-spaces" source="Orion">Flex spaces</keyword>, in particular, have continued to thrive in 2023, as occupiers prefer flexible working arrangements for their office portfolios. </li></ul>During the first three quarters of 2023, there was a 38 million square feet of gross absorption in office space in the the top six cities. This figure closely matched the gross absorption during the same period in 2022, indicating a robust trend even in the face of ongoing global uncertainties, as per a report by Colliers, a diversified professional services and investment management firm. The third quarter alone saw a leasing activity of 13.2 million square feet across these major cities, slightly surpassing the average quarterly demand of 12.6 million square feet observed since 2022. <cmsannotation type="cmsannotation" annotationid="Domestic occupiers drive office space demand" comment="Subhead" text="Domestic occupiers drive office space demand">Domestic occupiers drive <keyword id="1173916" type="General" weightage="20" keywordseo="office-space-demand" source="Orion">office space demand</keyword></cmsannotation> Before the pandemic, companies with foreign origins were the primary force behind the demand for office spaces. However, starting in 2022 and continuing into 2023, domestic occupiers have emerged as influential participants in India's office market. Despite the unpredictable global economic conditions, domestic occupiers contributed to nearly 50% of the total office space occupancy in 2023, says the report. While both domestic and foreign technology companies took their time to make decisions regarding their real estate portfolios, domestic firms, particularly those engaged in engineering and manufacturing, BFSI, pharma and healthcare, and flexible office spaces, have become more active and have expanded their office space presence across India's top six cities. <cmsannotation type="cmsannotation" annotationid="Key growth drivers" comment="Subhead" text="Key growth drivers">Key growth drivers</cmsannotation> The report reveals a trend of diversified demand in the office space market. While the technology continues to drive demand, contributing to 25% of year-to-date (YTD) leasing, there is now a broader spectrum of sectors driving this demand. Flex spaces, engineering and manufacturing, and the BFSI (Banking, Financial Services, and Insurance) sectors have all seen substantial increases in their respective shares, each gaining up to 6 percentage points. Flex spaces, in particular, have continued to thrive in 2023, as occupiers prefer flexible and adaptable working arrangements for their office portfolios. “Contrary to earlier belief, India office demand for the first three quarters of 2023, has followed an overall trajectory almost similar to 2022. With strong domestic macro-economic indicators backing the demand of office space, the momentum is likely to continue in the last quarter of the year,” says Peush Jain, Managing Director, Office services, India, Colliers. <cmsannotation type="cmsannotation" annotationid="Maintaining status quo" comment="Subhead" text="Maintaining status quo">Maintaining status quo</cmsannotation> In the first nine months of 2023 the introduction of new office space supply in the top six cities decreased by 1% compared to the previous year. Approximately 33 million square feet of new developments were completed during the first three quarters of 2023. Throughout the first three quarters of 2023, there has been an average of 10.9 million square feet of new office space deliveries, which is in line with the quarterly average of 10.7 million square feet observed in 2022. Thanks to a relatively stable demand and a consistent influx of new supply, the overall vacancy rates and rental prices have remained within a relatively stable range. Trends in Grade A new supply (in million square feet) <table style="border-width: initial; border-style: none;"></colgroup><tbody><tr><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">City </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:top;background-color:#e6f7fe;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">Q3 2022 </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:top;background-color:#e6f7fe;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">Q3 2023 </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:top;background-color:#e6f7fe;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">Q3 2023 (YoY change) </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:top;background-color:#fff6cc;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">YTD 2022 </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:top;background-color:#fff6cc;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">YTD 2023 </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:top;background-color:#fff6cc;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">YTD (YoY change) </td></tr><tr><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">Bengaluru </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">2.3 </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:top;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;"> 2.9 </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">23% </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;"> 8.1 </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;"> 10.7 </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">32.0% </td></tr><tr><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">Chennai </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">- </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:top;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;"> 0.2 </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">100% </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;"> 4.2 </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;"> 3.4 </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">-19.6% </td></tr><tr><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">Delhi-NCR </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">3.9 </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:top;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;"> - </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">-100% </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;"> 6.5 </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;"> 3.3 </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">-47.8% </td></tr><tr><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">Hyderabad </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">1.5 </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:top;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;"> 6.7 </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">347% </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;"> 7.9 </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;"> 12.1 </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">52.9% </td></tr><tr><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">Mumbai </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">0.7 </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:top;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;"> 0.3 </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">-58% </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;"> 1.8 </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;"> 0.9 </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">-52.0% </td></tr><tr><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">Pune </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">0.8 </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:top;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;"> 0.7 </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">-6% </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;"> 4.5 </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;"> 2.3 </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">-49.6% </td></tr><tr><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">Pan India </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">9.2 </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;"> 10.8 </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">17% </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;"> 33.0 </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;"> 32.7 </td><td style="border-left:solid #000000 0.75pt;border-right:solid #000000 0.75pt;border-bottom:solid #000000 0.75pt;border-top:solid #000000 0.75pt;vertical-align:bottom;padding:0pt 5pt 0pt 5pt;overflow:hidden;overflow-wrap:break-word;">-1.0% </td></tr></tbody></table> Source: Colliers

Domestic occupiers keep office space demand high in 2023

Average office rentals remained stable during April-June at ₹95 per square feet across six major cities as new supply rose 32%, while demand grew by a modest 2 %, according to <keyword id="3166898" type="General" weightage="20" keywordseo="colliers-india" source="Orion">Colliers India</keyword>. Real estate consultant Colliers India released its <keyword id="17907085" type="General" weightage="20" keywordseo="quarterly-data-of-six-major-office-markets" source="Orion">quarterly data of six major office markets</keyword> -- Bengaluru, Delhi-NCR, Mumbai, Chennai, Hyderabad and Pune -- on Wednesday. Gross leasing of office space rose 2 % to 14.6 million square feet across top six cities during April-June, from 14.3 million square feet in the year-ago period, driven by technology, engineering and manufacturing sectors. Chennai saw a three-fold jump in office demand, beating Delhi-NCR and Mumbai in leasing activities. New supply of office space rose 32 % to 12.4 million square feet across these six cities from 9.4 million square feet. Weighted average rental remained flat at ₹ 95 per square feet a month, across six cities. Peush Jain, managing director-office services, India, Colliers, said, "While the demand improved during the quarter, supply saw significant three-fold rise year-on-year, and was at par with demand. Hence rentals largely remained steady." As the demand improves further in coming quarters, Jain said there is a potential upside on rentals by the end of the year. As per the city-wise data, office space leasing in Bengaluru fell 22 % to 3.4 million square feet in April-June from 4.4 million square feet in the year-ago period. However, new supply more than doubled to 3.8 million square feet from 1.6 million square feet. Office rent in Bengaluru rose 1 % to ₹ 91.9 per square feet a month, from ₹ 90.6 in the year-ago period. In Chennai, the office leasing tripled to 3.3 million square feet from 1.1 million square feet. New supply jumped to 2.4 million square feet from 1 million square feet. Office rent in Chennai grew by 2 % to ₹ 75.1 per square feet from Rs 73.4 per square feet a month. Office leasing in Delhi-NCR was up 11 % to 3.1 million square feet from 2.8 million square feet. New supply rose 43 % to 2.1 million square feet from 1.4 million square feet. Monthly rent in Delhi-NCR appreciated by 2 % to ₹ 94.2 per square feet from ₹ 92.4 per square feet. In Hyderabad, the office demand fell 22 % to 1.5 million square feet from 1.9 million square feet, while new supply fell 19 % to 3 million square feet from 3.8 million square feet. Monthly Office rent remained stable at ₹ 73.7 per square feet from ₹ 73.6 per square feet. The gross office space leasing in Mumbai was down 41 % to 1.6 million square feet from 2.8 million square feet. New supply plunged 79 % to 0.2 million square feet from 1 million square feet. Office rent remained stable at ₹ 140.2 per square feet from ₹ 139.9 a square feet. In Pune, the leasing activities grew 28 % to 1.7 million square feet during April-June this year from 1.3 million square feet in the year-ago period. New supply increased 52 % to 0.9 million square feet in the second quarter of this calendar year from 0.6 million square feet in the corresponding period of the previous year. The average monthly office rent increased 1 % to ₹ 76.7 per square feet in April-June from ₹ 75.6 per square feet in the year-ago period. According to Colliers, the share of space leased by coworking operators increased to 17 % from 11 % during the period under review. Bengaluru-based managed office player Urban Vault co-founder Amal Mishra said, "corporates of all sizes have been taking office space in coworking centres and they are looking to increase the share of flex space in their overall real estate portfolio." Flexibility to scale up and scale down business, saving of capital expenditure and avoiding hassles to manage real estate are major considerations for corporates while choosing coworking space, Mishra noted. Gross absorption/leasing of office space does not include lease renewals, pre-commitments and deals where only a letter of intent has been signed, Colliers said.

Flat demand keeps office rent stable in Apr-Jun even as new supply rises  32% across top 6 cities: Colliers

<ul><li>The share of flex spaces in occupiers' overall portfolio in India is estimated to have risen to around 10-12% in 2023 </li><li>As of Q1 2023, the <keyword id="12685716" type="General" weightage="20" keywordseo="flex-space" source="Orion">flex space</keyword> penetration in India is reported to be at 6.5%. </li><li><keyword id="15935" type="General" weightage="20" keywordseo="tech-companies" source="Orion">Tech companies</keyword> occupy 50% of total flex space in India. </li></ul>In an evolving global workplace, occupiers in Asia-Pacific (APAC) are struggling with the challenges posed by the <keyword id="10322299" type="General" weightage="20" keywordseo="hybrid-work-model" source="Orion">hybrid work model</keyword>, which displays inconsistencies across different markets and industries, as per the Global Occupier Outlook 2023 by Colliers, a services and investment management company. However, despite the widespread challenges faced by occupiers globally, the adoption of flex spaces in India has been rapid. This can be attributed to the attractiveness of flexibility, agility, and cost-effectiveness that flex spaces offer. According to industry experts, flex spaces are increasingly becoming an essential component of occupiers' portfolios in India. The share of flex spaces in occupiers' overall portfolio is estimated to have risen to around 10-12% in 2023, up from 5-8% before the pandemic in 2019, based on interactions with industry experts. Says Peush Jain, Managing Director, Office Services, India, “Flex spaces have emerged as a core strategy for occupiers to adopt a decentralized <keyword id="17560207" type="General" weightage="20" keywordseo="workspace-model" source="Orion">workspace model</keyword>, serving as a promising alternative to the traditional paradigm. As compared to shorter lease tenures of 1-2 years pre-pandemic, occupiers are now going for longer commitments of 3-5 years with flex space operators as they look to integrate flex space as a long-term solution. During 2022, leasing by flex space operators touched 7 mn sq ft across top 6 cities, highest in any year. This was a 46% Y-o-Y increase led by prominent IT hubs such as Bengaluru and Pune.” As of Q1 2023, the flex space penetration in India (or the proportion of grade A flex space stock to grade A office stock) is reported to be at 6.5%. Flex spaces have offered companies the necessary agility to rapidly scale their operations, allowing businesses to effectively adapt to changing circumstances. <cmsannotation type="cmsannotation" annotationid="Tech drives adoption" comment="subhead" text="Tech drives adoption">Tech drives adoption</cmsannotation> In India, the demand for flex spaces has been significantly driven by technology occupiers in the top cities with tech companies occupying 50% of total flex space in India. Additionally, sectors such as engineering and manufacturing and BFSI (banking, financial services, and insurance) are actively adopting hybrid working models through flex spaces. In larger markets like Mumbai and Bengaluru, the demand for flex space from BFSI and engineering occupiers is nearly equal to that of technology occupiers. Looking ahead, the demand from technology occupiers is expected to remain strong in the next two years, driven by a robust recovery and hiring plans as businesses continue to prioritize cost rationalization. <cmsannotation type="cmsannotation" annotationid="Hybrid, the way forward" comment="subhead" text="Hybrid, the way forward">Hybrid, the way forward</cmsannotation> Occupiers are reevaluating their office footprint to determine the ideal balance for their employees, favoring a <keyword id="10310934" type="General" weightage="20" keywordseo="hybrid-work" source="Orion">hybrid work</keyword> model. While remote work has been experienced extensively, physical presence is deemed crucial by major occupiers. Flex spaces have emerged as a central solution, optimizing costs and enabling employee flexibility. The hybrid model has reset workplace expectations, allowing employees to choose where they work. Distributed workspace strategies are increasingly popular, with companies opting for multiple satellite offices instead of a single headquarters. This has driven demand for flex spaces in peripheral and non-metro cities, particularly among technology, consulting, and e-commerce firms.

Flex space demand on the rise as hybrid work model finds footing: Colliers

<ul><li>Flex space occupiers leased 2.1 million square feet in Q1 2023, which accounted for 20% of total leasing. </li><li>While leasing activity dropped by 19% YoY in Q1 2023, it’s expected to pick up in the latter half of the year. </li><li>During Q1 2023, vacancy levels in three out of the top six cities in India remained steady compared to Q4 2022. </li></ul>An impending recession and economic challenges have softened <keyword id="181150" type="General" weightage="20" keywordseo="office-space" source="Orion">office space</keyword> leasing in the first quarter of 2023, says a <keyword id="7370097" type="General" weightage="20" keywordseo="colliers-report" source="Orion">Colliers report</keyword>. The office sector leasing in top six cities stood at 10.1 million square feet in Q1 2023, which is 19% lower than what it was in the same quarter last year. While the general mood is that of caution, <keyword id="15075163" type="General" weightage="20" keywordseo="flex-operators" source="Orion">flex operators</keyword> who gain from the dynamic nature of the business have increased their leasing. So much so, they leased as much as tech companies in the quarter. Flex space occupiers leased 2.1 million square feet of space during Q1 2023, which accounted for 20% of total leasing, slightly behind the technology sector's share of 22%. Combined, the two sectors accounted for almost 42% of total leasing across the top six cities, the report says. “Occupiers continue to show interest in flex spaces as they look for ways to control costs while providing convenient workspaces for their employees. Large technology companies are also turning to flex spaces due to their benefits, including flexible lease terms, lower capital expenditures, and modern workplace designs,” the report said. Tech companies have decreased conventional leasing also due to concerns about a potential recession and layoffs in the sector, Colliers said. A cautious approach During Q1 2023, vacancy levels in three out of the top six cities in India remained steady compared to Q4 2022, suggesting a cautious and strategic approach across markets. Compared to the previous year, vacancy rates decreased by 210 basis points due to a significant increase in demand. Hyderabad, Delhi NCR, and Pune saw a slight increase in vacancy levels due to a significant increase in supply in 2022. In Mumbai, vacancy levels dropped to 15.3% by the end of 2022. In Q1 2023, vacancy rates remained stable due to limited availability of new supply and consistent demand. Says Peush Jain, MD- office services India, Colliers, “At a time when occupiers are delaying decision making on leasing office spaces amidst continued economic uncertainties, the office market witnesses signs of stability in Q1 2023 with the vacancy levels remaining intact at 16.4% compared to the previous quarter.” <table style="border-width: initial; border-style: none;"></colgroup><tbody><tr><td style="border-left:solid #000000 0.9999975pt;border-right:solid #000000 0.9999975pt;border-bottom:solid #000000 0.9999975pt;border-top:solid #000000 0.9999975pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">City </td><td style="border-left:solid #000000 0.9999975pt;border-right:solid #000000 0.9999975pt;border-bottom:solid #000000 0.9999975pt;border-top:solid #000000 0.9999975pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">Vacancy Q4 2022 </td><td style="border-left:solid #000000 0.9999975pt;border-right:solid #000000 0.9999975pt;border-bottom:solid #000000 0.9999975pt;border-top:solid #000000 0.9999975pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">Vacancy Q1 2023 </td></tr><tr><td style="border-left:solid #000000 0.9999975pt;border-right:solid #000000 0.9999975pt;border-bottom:solid #000000 0.9999975pt;border-top:solid #000000 0.9999975pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">Bengaluru </td><td style="border-left:solid #000000 0.9999975pt;border-right:solid #000000 0.9999975pt;border-bottom:solid #000000 0.9999975pt;border-top:solid #000000 0.9999975pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">12.70% </td><td style="border-left:solid #000000 0.9999975pt;border-right:solid #000000 0.9999975pt;border-bottom:solid #000000 0.9999975pt;border-top:solid #000000 0.9999975pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">12.80% </td></tr><tr><td style="border-left:solid #000000 0.9999975pt;border-right:solid #000000 0.9999975pt;border-bottom:solid #000000 0.9999975pt;border-top:solid #000000 0.9999975pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">Chennai </td><td style="border-left:solid #000000 0.9999975pt;border-right:solid #000000 0.9999975pt;border-bottom:solid #000000 0.9999975pt;border-top:solid #000000 0.9999975pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">19.90% </td><td style="border-left:solid #000000 0.9999975pt;border-right:solid #000000 0.9999975pt;border-bottom:solid #000000 0.9999975pt;border-top:solid #000000 0.9999975pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">16.6%* </td></tr><tr><td style="border-left:solid #000000 0.9999975pt;border-right:solid #000000 0.9999975pt;border-bottom:solid #000000 0.9999975pt;border-top:solid #000000 0.9999975pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">Delhi NCR </td><td style="border-left:solid #000000 0.9999975pt;border-right:solid #000000 0.9999975pt;border-bottom:solid #000000 0.9999975pt;border-top:solid #000000 0.9999975pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">19.60% </td><td style="border-left:solid #000000 0.9999975pt;border-right:solid #000000 0.9999975pt;border-bottom:solid #000000 0.9999975pt;border-top:solid #000000 0.9999975pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">20.00% </td></tr><tr><td style="border-left:solid #000000 0.9999975pt;border-right:solid #000000 0.9999975pt;border-bottom:solid #000000 0.9999975pt;border-top:solid #000000 0.9999975pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">Hyderabad </td><td style="border-left:solid #000000 0.9999975pt;border-right:solid #000000 0.9999975pt;border-bottom:solid #000000 0.9999975pt;border-top:solid #000000 0.9999975pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">18.60% </td><td style="border-left:solid #000000 0.9999975pt;border-right:solid #000000 0.9999975pt;border-bottom:solid #000000 0.9999975pt;border-top:solid #000000 0.9999975pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">19.90% </td></tr><tr><td style="border-left:solid #000000 0.9999975pt;border-right:solid #000000 0.9999975pt;border-bottom:solid #000000 0.9999975pt;border-top:solid #000000 0.9999975pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">Mumbai </td><td style="border-left:solid #000000 0.9999975pt;border-right:solid #000000 0.9999975pt;border-bottom:solid #000000 0.9999975pt;border-top:solid #000000 0.9999975pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">15.30% </td><td style="border-left:solid #000000 0.9999975pt;border-right:solid #000000 0.9999975pt;border-bottom:solid #000000 0.9999975pt;border-top:solid #000000 0.9999975pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">15.30% </td></tr><tr><td style="border-left:solid #000000 0.9999975pt;border-right:solid #000000 0.9999975pt;border-bottom:solid #000000 0.9999975pt;border-top:solid #000000 0.9999975pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">Pune </td><td style="border-left:solid #000000 0.9999975pt;border-right:solid #000000 0.9999975pt;border-bottom:solid #000000 0.9999975pt;border-top:solid #000000 0.9999975pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">16.20% </td><td style="border-left:solid #000000 0.9999975pt;border-right:solid #000000 0.9999975pt;border-bottom:solid #000000 0.9999975pt;border-top:solid #000000 0.9999975pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">16.70% </td></tr></tbody></table>Source: Colliers Market expected to pick up in the later part of the year In most markets, new office supply matched demand, leading to stable vacancy rates. Colliers says that the market is expected to pick up in the latter half of the year due to strong growth fundamentals. “Going ahead, we expect demand and supply to move in unison, keeping the vacancy and rental levels range-bound. The latter part of 2023 may see signs of strong recovery provided the recessionary concerns lessen in the beginning of the second half of 2023,” says Jain. Despite a strong pipeline of new office supply, developers will proceed with caution and closely monitor demand to avoid speculative supply.

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Demand for flex realty upbeat even as overall sales dip in Q12023: Colliers

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Flat demand keeps office rent stable in Apr-Jun even as new supply rises 32% across top 6 cities: Colliers

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Flex space demand on the rise as hybrid work model finds footing: Colliers

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